ATM Ownerships Still Returning 20% P/A

When the Reserve Bank of Australia abolished the indirect fees banks charged for accessing money from ATM transactions in March 2009, they opened up a whole new market in which 20% return was the minimum offered. Prior to this, banks were allowed to charge an interchange fee for transactions from all ATMs. However, these changes brought in by the Reserve Bank led to an increase in the number of ATMs in Australia not operated by ‘the big four’.

“Previous to the changes, the banks charged an interchange fee on every transaction conducted through an ATM,” Own Your Own ATM director Corr Piccone says. “That meant when NAB contacted ANZ to get money for a foreign ATM transaction, ANZ would charge $1 to NAB to access the funds. This was acceptable between the banks because the fee would just go back and forth.” However, the interchange fee meant the non-bank ATMs, which make up the greater proportion of ATMs in this country, were actually losing a dollar from every transaction.

“When the Reserve Bank abolished the interchange fee and brought in direct charging, the ATM market changed overnight,” Corr says. “The independent ATM networks were making an extra dollar per transaction and were operating on a far more profitable basis. It presented a good opportunity for independent ATM deployers to take advantage of the new direct charging regime by sharing some of this windfall with ATM investors in return for the ability to expand their networks aggressively.”

The Australia Institute, an independent think-tank based in Canberra, released a report that found that once the changes took effect, the number of investors buying into non-bank ATMs rapidly increased. The report’s author, Josh Fear says, “the abolition of indirect fees has made owning ATMs much more profitable”.

An ATM portfolio consists of plant and equipment and has depreciation benefits. The machines are run by deployers, who manage the business for you. All ATM management, servicing, insurance, security and payment processing is completed by experienced ATM deployment companies at their expense for the life of the ATM agreement. This means once a business owner buys a machine they have an end-to-end solution and zero running costs.”
“Daily transactions will fluctuate and it’s interesting to see how you’ve gone each month but after your first year you will be able to establish an average which is typically consistent.

Corr says "The privately owned ATM business is thriving with over 2,500 machines sold to individual investors out of 17,000 non-bank ATMs, that’s a significant proportion.” And they have the enquiries to match. This is a growth market.

“We have 5 to 10 inquiries a day from investors who want to own their own ATM business,” Corr says. “They include everyday mum and dads, self funded retirees as well as sophisticated investors who might want more diversification in their portfolios."

Currently there are three deployers who will sell you an ATM. Own Your Own ATM acts as a broker to the deployers, selling ATMs to clients on behalf of the deployer, but he recommends that people conduct their own research to acquaint themselves with which deployer would best suit their requirements.

The ATM machines range in price from $14,000 to $28,500 plus gst although occasionally they run special promotions which can increase returns significantly. Some deployers will disclose their machines locations before you buy, the others install only after purchase and locations are chosen at the discretion of the deployer, they are disclosed once installed on your monthly statement. ATM agreements range from 8 – 10 years depending on the deployer you choose.

Corr feels you need to work out your opportunity benefit before committing. Many have bought to enhance their retirement funds and others have used it as a supplement for their managed funds or property portfolios. Buy them outright, through your self-managed super fund or borrow money against property holdings to purchase and you can certainly profit with 20% p.a. minimum returns. Taking your cash and putting it into an ATM portfolio and re-investing the monthly returns in a savings account to compound your return, is very effective as a savings tool.

Owning ATMs is an opportunity that in times of extreme market volatility is something worth considering to help diversify your investment portfolio.

The above information was supplied by Own Your Own ATM. While due care is taken, the viewpoints expressed by contributors and/or sponsors do not necessarily reflect the opinions of Your Investment Property.

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